Positive Near Term Outlook for Cattle MarketsWed, 18 Jun 2014 16:03:58 CDT
Everywhere you look higher prices for our beef and cattle prices, box beef trade has been moving higher, feedlot prices stronger, yearling prices on the upside, calf prices also higher on the southern plans. K-State Livestock Market Economist Glynn Tonsor says says there is some optimism out there in cattle country pushing the market higher.
"The main drivers underneth all of that is growing optimistism within the cattle industry that we're going to have a decent corn crop, coupled with we already know that supplies are tight but every signal we get reaffirms it and I think there is growing belief that demand is stable," Tonsor said.
That strong consumer demand is being bid into cattle prices - calves, yearling or feedlot cattle. Tonsor says right now the beef demand equation is a pleasant suprise.
"I think its important for our listens to recognize among the many things that trade does is that it allows us to send different products to the highest valued market, not just the whole carcass," Tonsor said. "The reason that is important as people are concerned that as we reduce what's available that people will step away from purchasing and that is probably the case for certain products."
Tonsor is known for his careful tracking of feedlot profitability - red or black ink. He says right now there is a lot of black ink flowing across the southern plains.
"The most recent numbers, we have April close out estimates that were $135 dollars per steer," Tonsor said. "That's actually the fourth consecutive month for here in 2014 that returns exceeded $125 per steer and that is the first time we've had such a fourth month positive or the magnitude being that positive sequesnce since 2003."
"The reason that's dermain ovsioualy we know we got off to a good start, but I would submit that is part of the on-going support and willingness to pay up for these feeders is that feedlot operators have had a good run," Tonsor said.
"Looking forward we project close outs throughout pretty much the rest of 2014, just to give some context," Tonsor said. "While the estimated returns are coming down each month we look forward, they are in excess of $50 positive returns per steer for closeouts between now and August and the main reasons for that is we continue to have on-going growth if you like or upward movement in expected fed cattle price and some improvement of cost of grain, which is what we are eluding to on the corn."
Both of those are a direct correlation to improving profitability for feeders. Overall he expects feedlot profitability will remain in feedyard country through September based on current trends through September but by October these higher feeder cattle prices could translate into some red ink.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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